Hackney moves into currency as BGI disappoints
UK - The London Borough of Hackney has appointed FX Concepts to run a specialist £150m (€162m) active currency programme for its local government pension scheme.
The mandate complements the scheme's recent appointment of Barclays Global Investors (BGI) to run a £150m global tactical asset allocation mandate. The two mandates represent new ground for the scheme's ever-widening investment strategy.
"We are constantly looking for ways to improve our investments," said a spokesperson for Hackney.
"The recent decision to diversify our asset base to include both global tactical asset allocation and currency overlay programmes came after the scheme's last review in 2007. These are both new areas for us and we expect both to add significant value," she continued.
However, BGI's contribution to the fund's value has thus far failed to excite. "BGI has had a disappointing start with a return of -6.8% against a benchmark of 4.4% - an underperformance of 11.3%," the scheme said.
That said, Hackney is confident this will change and recognised that the last quarter of 2008 saw some unprecedented times for investment managers of all types, according to documents from recent committee meetings.
"The geared nature of GTAA portfolios meant that the performance of such funds would by their very nature produce extremely volatile returns," it explained.
"Recovery from this position is feasible within a relatively short time frame. The relatively low exposure to this asset class will have a limited impact on the overall performance of the fund," it added.
FX Concepts are expected to make their first report to Hackney in June 2009.
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